Christine Lagarde - New IMF Chief

Despite all the talk of an “open, merit-based and transparent” contest, there was little reason to doubt that Christine Lagarde—France’s finance minister, a former head of a big global law firm, and one-time member of her country’s synchronised-swimming team—would get the top job at the IMF. The European Union, whose members control around a third of the votes on the fund’s board, had united behind her as soon as she entered the fray.
Emerging markets made much of their desire to see a non-European take the job but conspicuously failed to rally around her only rival, Mexico’s Agustín Carstens. All that remained was for America formally to throw its weight behind Ms Lagarde. It did so on June 28th, and soon after the fund’s board confirmed that she would be its 11th managing director.

In most ways, her appointment is in keeping with past practice. Like all ten managing directors who have preceded her, Ms Lagarde is European and got the job largely because of support from the fund’s rich-world shareholders. But there are some differences as well.

Ms Lagarde will be the first woman to run the IMF. Given that the position opened up because the fund’s last head, Dominique Strauss-Kahn, was charged with attempted rape, this is no bad thing. More importantly, and unlike previous IMF bosses, Ms Lagarde takes the job when Europe itself is the fund’s biggest client. Establishing and maintaining her independence from her former euro-area colleagues—whose support was crucial to her landing the role—will be a more important task for her than for her predecessors.

That will determine whether she succeeds in fulfilling the vision she outlined in her first official comments after being selected. In those remarks, Ms Lagarde stressed that she would seek to ensure that the IMF was “relevant, responsive, effective and legitimate”. On the first two counts she should have a relatively smooth ride. The IMF’s relevance may have been in doubt during the boom years but the crisis has seen it return decisively to centre stage. Contributions from its members have tripled its pre-crisis lending capacity, which now exceeds $750 billion. This increased firepower has allowed it to respond swiftly in 22 countries since the crisis. Having more money has also enabled it to offer financing on more flexible terms than before.


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